Riverhead Resorts co-owner detained in connection with Turkish prostitution ring

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10/25/2010 3:44 PM |

One of the businessmen behind Riverhead Resorts, the group planning to build a $1 billion resorts complex in Calverton, reportedly was detained by Turkish police in connection with a prostitution ring .

The Daily News reported Friday that “Tevfik Arif, 57, had been detained in Turkey on suspicion of setting up trysts between wealthy businessmen and Eastern European models ­— some underage — aboard a $60 million yacht once used by the nation’s founder, Mustafa Ataturk.”

Mr. Arif, who reportedly has denied the charges, is the sole owner of the Bayrock Group, which owns 50 percent of Riverhead Resorts, according to papers that Riverhead Resorts filed with Riverhead Town as part of its proposal to build land at the Enterprise Park at Calverton two years ago.

When asked about the charges, Mitch Pally, an attorney for Riverhead Resorts, said that Bayrock Group never actually owned more than 5 percent of the project and that efforts are already under way to remove Bayrock’s ownership interest entirely.

He insisted that Baldragon Homes, a Scottish company headed by John Niven, has been the principal owner of the Riverhead Resorts group.

Riverhead Resorts, which is seeking to build eight themed resorts at EPCAL, including one with an indoor ski mountain, was given more time to come up with the money for the project Tuesday, even though they owe the town about $6 million in fees to extend the life of the contract.

Town Board members, for the most part, had a good laugh at news of Mr. Arif’s detainment, but didn’t seem surprised or concerned, and indicated that it wouldn’t affect their vote on Riverhead Resorts.

“It was my understanding that Bayrock isn’t involved anymore,” Riverhead Supervisor Sean Walter said. He said he has never met with anyone from Bayrock since he’s been supervisor. He has met once with Mr. Niven.

Last week didn’t mark the first time the Bayrock Group saw negative press.

In August, the developers were named in a lawsuit filed by 15 people who bought condos in the Trump SoHo Condominium project in Manhattan, alleging that Bayrock and the other developers of the condos lied about the number of units sold.

In January 2008, shortly after the town entered into contract with Riverhead Resorts, a construction worker was killed in an accident while working on Trump SoHo, and violations were issued to the contractor Bayrock hired for the job for using materials that were not up to industry standards.

That same month The New York Times ran an article about Felix Satter, a Bayrock executive who the article said had been arrested nine years earlier when “accused of conspiring with the Mafia to launder money and defraud investors.”

And Jody Kriss, a former senior vice president at Bayrock who signed the agreement in September 2007 to authorize Bayrock to begin exclusive negotiations with the town for the EPCAL land, has since filed two lawsuits against Bayrock Group, calling it a “racketeer influenced and corrupt organization” in one of them. The lawsuits, filed in 2009 and 2010, mention by name Mr. Arif, Mr. Satter and Julius Schwarz, who had represented Bayrock in the “qualified and eligible sponsor” hearing before the town in December 2007. That hearing is designed to determine if the company has the experience and financial resources to complete the project they propose,

Should they get that far, Mr. Pally acknowledged that Riverhead Resorts also will need to undergo a new  “qualified and eligible sponsor” hearing, because they now plan to eliminate Bayrock Group from the ownership of Riverhead Resorts.

In the original hearing, papers submitted to the town indicated that Riverhead Resorts was half-owned by Baldragon Homes, a Scottish company owned by John Niven, and half-owned by Bayrock Group, a New York company that has worked with Donald Trump on a number of other high-profile projects. Much of the documentation presented to the town at the time dealt with Bayrock’s financial ability, as Baldragon Homes was described as a residential home builder whose work was limited to Scotland.

Mr. Pally said that while Bayrock Group initially intended to be part of the project, they soon “lost their ability to finance it,” and have not been active in the financing or management of Riverhead Resorts for about two years.

The town chose Riverhead Resorts over another project called EPCAL Centre, which was led by developer Scott Rechler and featured motorsports components. Racing fans continue to press the town to use the EPCAL property for motorsports uses.

tgannon@timesreview.com

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